Data and other information necessary to compute federal, state, local, and foreign income tax liabilities is often reported to taxpayers on forms. For example, many U.S. employers use IRS Form W-2 to report yearly wages to their employees. Forms are also used to report various types of non-wage income, mortgage interest, student loans, distributions, benefits, etc. In many instances, the forms are computer generated and are then printed and mailed to taxpayers at the end of a tax year. Some taxpayers may receive many paper forms that have data needed to prepare their tax returns.
Individuals that use a tax preparation service typically submit all of their forms to a tax professional who manually enters data from the tax documents into tax preparation software that is used to complete tax returns for the taxpayers. Manual data entry is a time consuming activity that the tax professional must perform to provide tax preparation services. It consumes time that the tax professional could otherwise devote to preparing the tax return and providing assistance to a taxpayer. It also presents opportunities for data entry errors that could impact a taxpayer's tax liability. When the tax professional is asked to process a high volume of tax returns, delays in completing the tax returns may result simply because the tax professional does not have time to enter the tax data needed to complete the returns. There is a need for an automated system and method for acquiring tax data that eliminates the need for tax professionals to spend time entering tax data into tax preparation software and that reduces data entry errors. There is need for an automated system and method for acquiring tax data that allows a tax professional to devote more time to preparing tax returns and less time to data entry.